Casino King May Be Market's Biggest Loser

Oct. 28, 2008

By ALICE GOMSTYN ABC NEWS Business Unit

America's billionaire chief executives, like other investors, have watched their net worth dwindle as chaos continues to dominate the stock market. But one CEO's bet on his own company has made him one of the biggest losers.

Casino magnate Sheldon Adelson has lost more than $16.6 billion in the last 7½ months thanks to investments in his own business, Las Vegas Sands Corp. The company owns the Venetian, the lavish Las Vegas hotel and casino known for its indoor recreation of the canal-lined neighborhoods of Venice, Italy, and is also developing casino resort properties in Macao, China.

A Sands spokesman said Adelson was unavailable for comment.

According to analysis by Steven Hall & Partners, a compensation-consulting firm in New York, Adelson's investments in Sands Corp. plunged $16,640,655,613 in value between Dec. 31, 2007, and Oct. 17 of this year.

"He's in the gaming business. He's gamed it all the way up and down," said Pearl Meyer, a senior managing director with the firm.

The investment losses by Adelson, 74, who was named the world's third-richest CEO earlier this year by Forbes magazine, dwarf those of fellow big-time CEOs like Warren Buffett, Rupert Murdoch, Steve Ballmer, Larry Ellison and Jeff Bezos. Of the five, Buffett, a legendary investor and the chief of Berkshire Hathaway, lost the most -- he saw his Berkshire investments plunge by nearly $9.6 billion. Media mogul Murdoch, meanwhile, lost the least, with his News Corp. holdings dropping just more than $3.9 billion, according to Steven Hall & Partners.

One of the factors behind Adelson's spectacular losses is obvious: The casino business is among the industries hardest hit in the economic slump. Shares of Sands have dropped from a 52-week high of $148.76 to, most recently, below $6.

But there's another reason that Adelson is grappling with an 11-figure loss: His gamble on his casino business is an especially large one -- he owns at least 52 percent of Sands. By comparison, Buffet's holdings in Berkshire amount to a 28 percent stake in the investment company while Ellison, the CEO of the software company Oracle, has a 22.6 percent stake in his.

Adelson "has a very large stake which he has maintained so that his upside was very significant -- as his downside," Meyer said.

Is Ego Behind Casino Mogul's Loss?

Why does Adelson have such an out-size stake? Steve Fischer, the author of the 2005's "When the Mob Ran Vegas" and the upcoming "Showgirls' Stories," said it's about ego and control.

"Sands Corp.is him," Fischer said. "He thinks of Sands Corp. the same way he thinks about himself -- there are no other decision makers."

A shrewd businessman and "a tough cookie," Adelson is still approachable, Fischer said.

But Adelson doesn't just spend a lot on clothes. He's known for making sizable contributions to charitable causes, including to various Jewish organizations, as well as to the Republican Party.

"[W]e remain deeply committed to issues such as drug addiction, medical research, children's education and…important economic policies like free trade and low taxes," Adelson said at a recent reception where he received an award for corporate citizenship by the Washington, D.C.-based Woodrow Wilson Center for Scholars.

"When you hear about contributions being made, Sheldon Adelson's name is usually on the list," Fischer said.